Credit Utilization

[JoyJoy]

What should be one's credit utilization on credit cards? I read no more than 30% at My Fico.com and in Money Magazine. Today I read 50% at Fat Wallet. My girl friend then tells me no it's 40%!!!

Anyone know for sure?

Thanks!!

[geojen]

Re: Credit Utilization

I have always heard less than 50 percent, but 30 percent is better.

[disneysteve]

Re: Credit Utilization

Less is better. 30% is the figure I see most often. I've seen 25% in a couple of articles. I'm not sure that lower than 30% really boosts your credit score significantly. Since it is FICO that generates the score, I would go with their figure of 30%.

[JoyJoy]

Re: Credit Utilization

30% seems rather low and 25% is even worse However, 30% seems to be the magic number!

Thanks for answering my post.

[disneysteve]

Re: Credit Utilization

30% seems rather low

That's the idea. They want to see that you can control yourself and keep your spending well below your limit.

[Bluezy]

Re: Credit Utilization

I temporarily utilize 25% of my total available credit. This will go down to 0% after the payoff this month. I made a 0% cash advance through Capital One so they would report my max credit line to the CRA's. The balance will be paid in full when my first statement arrives, and my FICO will rise by October.

If I had to utlilize my credit line for other purposes, I would not get above 30%.

[safari]

Re: Credit Utilization

I normally use about 1-2% of my credit line and always pay my balance in full every month. My total credit line is $80K or so.

[Ima saver]

Re: Credit Utilization

You know, I pay my balance off every month, but the credit reporting agencies don't seem to know that or to notice it.

[disneysteve]

Re: Credit Utilization

You know, I pay my balance off every month, but the credit reporting agencies don't seem to know that or to notice it.

That's true. They really don't care, nor do they know. When your credit report gets pulled, it shows your balance at that moment. Odds are if you use your card regularly, there is always some balance, even if you pay the bill in full each month. By the time you pay the bill, you've charged more in the current billing period, so there isn't ever a zero balance.

What matters is your utilization ratio and making your payments on time, even if you carry a balance.

[creditcardfree]

Re: Credit Utilization

Now that I use 0% of my available credit limit, I think I may just check on my credit score. I've heard it goes down if you don't use credit...funny concept really.

[JoyJoy]

Re: Credit Utilization

That's the idea. They want to see that you can control yourself and keep your spending well below your limit.

Control is a bad word to a shopper However, I did make a note of the 30% figure and put it in my wallet.

Thanks disneysteve....... (lol)